Married couples get £1,000 tax allowance

 
Kate McCann
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THE CHANCELLOR gave more detail on one of David Cameron’s flagship policies in his Autumn Statement yesterday, setting out plans for how the married couples tax allowance will work.

Couples, including those in civil partnerships or same-sex marriages, will be able to transfer up to £1,000 of their tax-free personal allowance from 2015, as long as both are basic rate taxpayers or pay no tax, and one has some of their allowance left over. In reality, the policy will apply to low earners, those who work part time or couples where one partner does not work at all.

In his statement in the House of Commons the chancellor said the allowance was “just a start,” adding: “Four million families will benefit, many of them among the poorest working families in our country.

“This measure, along with the others we take today, ensures that across this parliament our policies are progressive – showing we’re all in this together, with the very rich paying the most.” The changes will be uprated in line with increases to the personal tax allowance.

The policy, first announced by the Prime Minister earlier this year in a swap with the Liberal Democrats on free school meals, has been criticised by many for its narrow focus. Around 1.3m families with children are set to benefit from the policy, according to exchequer to the Treasury, David Gauke. Just over four million couples will benefit overall.

Labour’s shadow chancellor Ed Balls responded by attacking the prime minister for failing to support families who are struggling with the rising cost of living. “Contrary to the prime minister’s claim in this house a few weeks ago, a married couple where both are paying basic rate income tax will get no benefit at all,” he said. “No wonder, Mr Speaker, his own chancellor has this week told the Daily Telegraph that he thinks the prime minister’s policy is, and I quote, a turkey of an idea.”

As well as the married tax allowance, Osborne announced a new tax-free childcare scheme which will help 2.5m families cover 20 per cent of their childcare costs. The chancellor also confirmed that the personal tax allowance will increase to £10,000 in April 2014, saving the typical taxpayer £705 per year compared to 2010, according to Treasury modelling.